The dollar index held below 103.5 on Friday after losing 0.8% in the previous session, tracking weakness in Treasury yields as a surge in weekly jobless claims reinforced expectations that the Federal Reserve will pause its interest rate hikes next week. The greenback was also down 0.6% so far this week, on track to decline for the second consecutive week. The number of Americans filing new claims for unemployment benefits jumped to 261K last week, posting the highest reading since October 2021 and exceeding forecasts of 235K. Markets now anticipate the Fed to hold rates steady at next week’s policy meeting, before resuming the tightening cycle in July. Investor also look ahead to US inflation data on Tuesday, as well as interest rate decisions from the European Central Bank and the Bank of Japan next week.
